The most common questions I get are variants of “Is this a good investment for me?”

Where can I invest my money? Should I get an MF or UITF? I got a VUL is that ok? Which investment is better? Did I make a good (the right) choice?

They would come from all sorts of people, with all sorts of background – student, OFW, people at the start of their careers, some near the end of their career.

Invariably though my answer is always the same. What do you want to do with the rest of your life? Get the price tag for that and invest for it.

I’m not sure that’s the answer they want though. Some just want an opinion on which investment will make them more money. Or maybe find out how to decide which investment will is better at making money.

But nevertheless, they got the “correct” answer. Without a clear use for the money they will earn, it would eventually amount to nothing. What if, for example, they invested 20k – or even 50k, and got a 50% return in one year? That’s big money. 30k-75k can buy you a lot of things.

In one of the better scenarios, a person could impulsively decide to buy a car. And could very well afford it. But after 5-10 years, that car would be old and need a replacement. In the meantime, monthly car payments, maintenance, registration, and insurance would take up otherwise available funds.

All well and good if getting a car was a life goal – and for a lot of people it is. But in this case, an increased earning capacity was the more critical path rather than a lump sum achieved thru investing.

In contrast, a modest office worker who invested “just” 20k and earned a relatively “low“ 7% would now have enough for that oven. And with no added recurring costs, could repeat the same process and get a mixer, then high quality baking utensils and equipment. It’s possible that in three short years, that person could very well achieve their dream of being a baker. And they didn’t really need great returns on their investment to do so.

Money is transactional. Having a lot of it enables you to do a lot of things. But being able to do a lot of things isn’t the same as knowing what you want to do with your life. For all you know, it might not cost that much. Of course it could also cost a heck of a lot.

So better decide what you want to do with your life now, while you still have time to prepare for it.

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photo credit: Midnight snacks via photopin (license)